Accounting Final Exam Question Paper: Strayer University

Topics: Corporation, Taxation in the United States, Limited liability company Pages: 7 (1192 words) Published: March 31, 2015
ACC 565 WK 11 Final Exam

1) To be an affiliated group, the parent corporation must directly own at least 80% of another group member.

2) A Canadian subsidiary cannot file as part of the consolidated group with its U.S. parent.

3) Brother-sister controlled groups can elect to file a consolidated tax return.

4) An advantage of filing a consolidated return is that losses of one affiliated group member may be offset against the taxable income of other group members in the same tax year.

5) The election to file a consolidated return is made annually.

6) A separate return year is a corporation's tax year for which it files a separate tax return or files a consolidated tax return with another affiliated group.

7) P and S are members of an affiliated group that has filed consolidated tax returns for a number of years. The sale of inventory by P that was acquired from S in an intercompany transaction outside the affiliated group triggers the recognition of gain by S.

8) Intercompany dividends and undistributed subsidiary earnings do not create temporary differences for affiliated companies filing a consolidated return.

9) A member's portion of a consolidated NOL may be carried back against that member's taxable income from the preceding two separate return years.

10) The treatment of capital loss carrybacks and carryovers is similar to NOLs.

11) The IRS can attempt to collect taxes owed on a consolidated return from any of the members of the consolidated group.

12) Intercompany sales between members of an affiliated group filing separate returns cause deferred tax assets to be recognized by both buyer and seller. Answer: FALSE
Page Ref.: C:8-10
Objective: 4
13) Identify which of the following statements is true.
A) To be part of an affiliated group, a corporation must be at least 80% directly owned by another group member. B) Only common stock is considered when determining if the 80% ownership test is met for affiliated group eligibility. C) An affiliated group electing to file a consolidated return may be composed of as few as two corporations. D) All of the above are false.

14) Which of the following corporations is an includible corporation for purposes of filing a consolidated tax return? A) insurance companies
B) S corporations
C) car manufacturing corporation
D) foreign corporations

15) Diana Corporation owns stock of Tomika Corporation. For Diana and Tomika to qualify for the filing of consolidated returns, at least what percentage of Tomika's total voting power and total value of stock must be directly owned by Diana? A)

Total voting power Total Value of stock
51% 51%

Total voting power Total Value of stock
51% 80%

Total voting power Total Value of stock
80% 51%

Total voting power Total Value of stock
80% 80%

16) Ajak Corporation owns 85% of the single class of Utech Corporation stock. Utech Corporation owns 35% of Tech Corporation. Ajak Corporation also owns 50% of Tech Corporation, and Tech Corporation owns 75% of Baxter Corporation. A) Ajak, Tech, Utech, and Baxter Corporations are an affiliated group. B) Ajak, Tech, and Baxter Corporations are an affiliated group. C) Ajak, Tech, and Utech Corporations are an affiliated group. D) None of the above are correct.

17) Which of the following corporations is entitled to join in a consolidated tax return without making a special election? A) corporations exempt from tax under Sec. 501
B) real estate investment trusts
C) closely held corporations
D) foreign corporations

18) Identify which of the following statements is true.
A) If 100% of the stock of two corporations is owned by the same individual, the two corporations are eligible to file a consolidated return. B) The check-the-box regulations permit partnership and LLCs to elect C corporation tax treatment. C) A group of corporations that...
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